Chairmen:

Public Bill Committee

[David Taylor in the Chair]

Child Maintenance and Other Payments Bill

David Taylor: Good morning. I want to place on the record the service of Chris Chope, who has chaired so many sittings. He is retiring hors de combat, and I shall be in charge for the remainder of the Bill’s passage in Committee.

Clause 17

Amendment proposed [9 October]: No. 118, in clause 17, page 7, line 32, at end insert—
‘(aa) make provision that where there is a change in circumstances of the non-resident parent, the Commission shall make a fresh assessment if the gross income position of the non-resident parent increases or decreases by 10 per cent. from the gross income figure fixed by the calculation currently in force.’.—[Andrew Selous.]
Question again proposed, That the amendment be made.

David Taylor: I remind the Committee that with this we are taking amendment No. 124, in clause 17, page 7, line 32, at end insert—
‘(aa) make provision to include that where there is a change in circumstances of the non-resident parent, the Commission shall review maintenance arrangements if the gross income of the non-resident parent has increased by greater than 25 per cent. or decreased by greater than 10 per cent. from the gross income figure fixed by the calculation currently in force;
(ab) make provision for supersession in circumstances in which updated income information is provided to the Commission and the maintenance calculation currently in force has been calculated using historic tax year information held at Her Majesty’s Revenue and Customs.’.
When the Committee adjourned on Tuesday evening, the Minister had replied to the debate and had invited Mr. Selous to withdraw amendment No. 118.

Andrew Selous: I do not intend to withdraw the amendment. I have listened carefully to many of the Minister’s explanations of previous amendments and have been convinced by them. However, I am not in this case. Given that we are going down the voluntary agreement route and using prior year Her Majesty’s Revenue and Customs’ data, it is not unreasonable for there to be a 10 per cent. rather than a 25 per cent. variation in income. If we fail to take such action outlined in the amendment, it will lead to unfairness that will undermine the commission’s chance of success.

Question put, That the amendment be made:—
Question proposed, That the clause stand part of the Bill.

David Taylor: With this it will be convenient to discuss new clause 5—Information required by the Commission—
‘In section 14 of the Child Support Act 1991 (information requirements), after subsection (1A) insert—
“(2) Regulations under subsection (1) shall in particular require a person, who is subject to a change of circumstance which would result in a decision by the Commission to superseding an earlier decision under section 17 of the Act on non-resident parents, to furnish the Commission with information and evidence regarding the said change of circumstances within 42 days.”.’.

Andrew Selous: The new clause attempts to help the new commission by putting a requirement on non-resident parents to provide it with information and evidence within 42 days of a change of circumstances. It is fairly obvious that non-resident parents will have a pretty big incentive to let the commission know straight away that there has been a greater than 25 per cent. reduction in their income in order to have their assessment reduced. However, without the provisions of the new clause, there would be no corresponding duty—certainly no incentive—on, for example, new resident parents to make sure that they alert the commission to the fact that their income has increased by more than 25 per cent., as a result of which money would not flow through to the children concerned as it should do.
We discussed addresses earlier and, if clause 17 were able to encompass the necessity for non-resident parents to provide a relevant address, I hope that the Minister will consider the matter in that light. He showed sympathy for the need for non-resident parents to provide addresses, as enforcement measures cannot easily be taken if their whereabouts are not known. I look forward to hearing what he has to say.

James Plaskitt: I welcome you to the Chair, Mr. Taylor, and I endorse your thanks to Mr. Chope for chairing the Committee prior to your arrival.
I thank the hon. Member for South-West Bedfordshire for tabling the new clause. He introduced it by saying that it would help the commission. I am not sure that it would, and I shall explain why. However, before I do so, I return to the issue of addresses and repeat what I said: Column Number 309 we are certainly looking at making address changes and the reporting of them to the commission a requirement. His point was perfectly valid.
Unfortunately there will be difficulties with the requirement that the hon. Gentleman is asking us to consider. It is unlikely that the person would always know whether a change in their circumstances affected their maintenance liability enough to trigger a supersession. Similar difficulties exist in relation to the 1993 and 2000 maintenance schemes. The person would not always know whether the changes amounted to more than the relevant tolerance level.
If the requirement that the hon. Gentleman seeks was introduced, the commission would provide clients with guidance at the outset of their claim, but doubt would still remain. The person could end up committing an offence possibly without knowing it. The commission would, like the agency before it, be inundated with notifications of changes. Parents would be unsure what changes to report, and a high proportion of those changes would have no effect on the level of maintenance payable, but they would still have to be investigated by the commission.
Therefore, under the amendment, the commission would be continually processing reported changes. There have been 5 million reported changes since the new scheme came into operation. That is 145,000 a month. We have to get the level of intervention down to give the commission a chance. Instead, maintenance liabilities will be kept up to date by way of an annual review. As part of that review, the income figures provided by HMRC will be updated to those of the latest available tax year. That will mean that assessments will be kept more up to date than is often the case now. Many maintenance calculations in force at the moment are still based on income information that was provided at the time of the original application. That will no longer be the case.
At the time of the review, parents will get the opportunity to report any other changes that have occurred. It should be noted that the amendment would be unenforceable without an appropriate sanction to back it up. Further, the commission could apply a sanction only once it became aware that an unreported change had occurred. That would be at an indeterminable point in time after the event. Therefore, given all of those difficulties, I hope that the hon. Gentleman will not press the new clause to a Division.

Andrew Selous: I have listened to the Minister. However, with the introduction of voluntary agreements, it is not a fair comparison to point out the number of current notifications and say that it will be the same going forward. I assume that Child Maintenance and Enforcement Commission will have less business than the current Child Support Agency. If the information is not provided, or forced to be provided, during the course of the year, some children will undoubtedly not get the increase in child maintenance that they should receive. However, I am not blind to the practical difficulties that the Minister mentioned and I am prepared not to press the new clause to a Division.
Question put and agreed to.
Clause 17 ordered to stand part of the Bill.

Clause 18

Michael Weir: I beg to move amendment No. 91, in clause 18, page 8, line 2, at beginning insert—
‘(1) All cases being dealt with under existing rules shall be transferred to the new maintenance calculation rules no later than twelve months after the coming into force of this Act.’.
I shall not detain the Committee long, but the amendment is important. With the introduction of CMEC, at least three different methods of calculating income will be running at the same time: the original system, which many of our constituents are still on; the so-called new system introduced in 2000; and the new CMEC system. That will add to confusion and error and will not give CMEC the chance to have a real break from the past difficulties of the CSA.
Like me, many hon. Members will have a large number of constituents—usually absent parents—coming into their surgeries complaining that they have not been transferred or “migrated” to the new rules introduced seven years ago. Everyone was supposed to have migrated four years ago. We have all had to explain that that did not happened because of the failure of the IT system. The effect has been that two people in identical circumstances—in the case of parents with care—can receive vastly different amounts depending on the date on which their case entered the system. That is patently unfair and has led to a great deal of bitterness among those in the system. It seems that the basic starting point of any redesign of the system must be that it is transparent, fair and accepted by those whom it will affect. I concede that that last point will probably be a hope too far in many cases, but it seems sensible to try to ensure that it has the greatest possible acceptance. To do so, we must ensure that everyone is treated in the same way by the system, and that will not be achieved unless everyone is on the same system of calculation and are seen to be treated the same.
There are also practical problems. I understand that the Public and Commercial Services Union has expressed concern about how agency staff will be able to deal with the three systems running concurrently. I am also concerned about how any migration will be handed. That matter was canvassed in our first evidence-taking session, at which Lord McKenzie said:
It is not entirely clear who can request the choice to be in or out of the system, but logically it will only take place if the parent with care wants it to. That is a dangerous way to proceed because the parent with care effectively has a veto over it, perhaps for understandable reasons. I appreciate that many parents with care will not want the case to migrate because they may receive less money. However, giving them an effective veto over the transfer of cases will undoubtedly lead to a great Column Number 311 deal of friction between the parties and will do nothing to help in what may already be difficult circumstances.
It is interesting that, in Tuesday’s debate on schedule 4, the Minister made it clear that the percentage for deductions that were included in the Bill were chosen to ensure that the financial effect of the CMEC rules will have the same effect on the absent parents as the so-called new rules under the current arrangement; there would not be a greater financial penalty. That is sensible in dealing with the system, but it also highlights the difficulty with those who are still being assessed on the old rules, since no attempt has been made to put them on the same basis, and that may well lead to a heightening of the sense of injustice that they feel.
I note from the evidence-taking session that it will be 2013 before cases are migrated. With the best will in the world, and considering previous experience, it is highly likely that that time scale will slip. After all, everyone should have been on the new system some years ago. That means that the current unfairness within the system will continue for at least another seven years and probably sometime thereafter. Lord McKenzie accepted that point to some extent when he said:
Certainly, most people who are paying will not be able to get out of the system because, with the best will in the world, a change is likely to take place only if the parent with care agrees to it. I suggest that the situation is worse than envisaged and the continuation of three different systems with vastly different outcomes will undermine efforts to have a new beginning for child maintenance. Indeed, the more cynical may feel that those who are still on the old rules will be dealt with simply by the passage of time—by the time that the case that is on the old rules is migrated, the children may well be out of the system, given the length of time it takes for that to happen. That is not the way to proceed.
I am sure that the Minister will tell me that 12 months is far too short a time scale, but I would be interested to hear his views. I think that that is a fundamental problem with the system. We do not have fairness within the current system because of the differing rules. That unfairness will be heightened by the introduction of CMEC and will lead to the same difficulties that we have with the CSA, where parents feel aggrieved when their workmates receive totally different payments than they do, even though their circumstances can be almost identical.
I support the amendment in spirit, although I anticipate the Minister in saying that I, too, think that 12 months is probably too short. Doubling that period might make the proposal more feasible. The hon. Member for Angus spoke well to the practical problems, which are the real-world problems that affect our constituents in the difficult decisions that they have to make. We have all had constituents who have had to decide whether to change from the original system to the second system, and some who have got themselves into further administrative complications in bringing that to be.
The situation will be better as and when there is a single system. However, I think that the hon. Gentleman was right, perhaps somewhat cynically, to anticipate that the passage of time may, in the end, be the solution—as was once called “the biological solution” in relation to General de Gaulle.
I would like to emphasise the matter a little more, although I say so with some diffidence, as the hon. Member for Angus is a lawyer and I am not. On the other hand, I have a family member who is somewhat interested in the human rights complex, if I may put it that way, and who knows quite a lot about it, although I have not sought her advice on this matter. I cannot help feeling that, if I were ever a Minister again—not something that I anticipate, although I would wish it on some of my colleagues very shortly—I would be uneasy and uncomfortable about this situation. The basic principle of our administrative system, and one of the areas of criticism under our administrative law, is that people should be treated fairly. It is perfectly defensible to define people in different circumstances as being in different categories and to make arrangements for them. However, if one looks at the history of jurisprudence in the European Court of Human Rights, one finds that even where people have made those distinctions, the court can look through to the fact of the matter and say that there is functional or indirect discrimination, even if there is not formal discrimination. I am thinking, for example, of arrangements for notice periods for employment and unfair dismissal where the Court has taken an interest because there is an effective discrimination against women.
There is an actual discrimination in this case because people whose income and other circumstances are exactly the same can be treated under any one of three categories. That is an extremely uncomfortable position for Ministers. I suspect—I am not asking the Minister to reveal his inner thoughts on the matter—that he would be anxious to move off this ground as soon as possible. In the past, I have tweaked the Law Officers and said, “I am a humble man, my lord, and do not understand these things, but I cannot think that it is quite right to have these three systems.” I have received a suitably polite and dismissive response.
Whether a legal challenge against having three different systems would succeed is much less important than the fact that it is an uncomfortable situation. It is not congruent with our traditions and administrative system to have people who, in otherwise identical cases, are treated in three separate ways as a result of a contingent administrative situation. Nobody expects the impossible, particularly given the history of the Child Support Agency to date, but it would be helpful to encourage the Minister along the way to get the Column Number 313 systems rationalised into one shape as soon as possible, remembering—if I may offer him a final olive branch—that it is always open to people who do not like the shape of the new system to conclude a voluntary arrangement in order to take themselves out of the commission. Given the record in the past and the perceived unfairnesses and failures, I can quite understand it if some might be tempted to do so.

Andrew Selous: I am sympathetic to the amendment tabled by the hon. Member for Angus. There is widespread anger that there are currently two schemes, and that anger will be multiplied when there are three schemes. I am aware of some of the practicalities, not least because I have met Stephen Geraghty in the past couple of weeks. I will listen with interest to what the Minister has to say about the practical issues around trying to achieve the admirable objective put forward by the hon. Member for Angus.

James Plaskitt: We all understand the point made by the hon. Member for Angus and the motives behind his amendment. I equally understand and largely agree with what the hon. Member for Daventry has said.
From our constituency casework, we are all familiar with the difficulties. Everyone accepts that the current circumstances are not ideal, but we can also see the difficulties in getting from where we are to where we need to be. The hon. Member for Daventry thought that I might be feeling uneasy in my ministerial position given the circumstances. I say to him that I would feel uneasy in my position, if I were not learning from previous attempts to move from one system to another. Equally, if I were about to impose a completely unrealistic and unachievable target on the commission, it would create more uneasiness in my mind than any uneasiness that I may feel at the moment.
There is no doubt that the transfer is one of the commission’s most significant challenges. Experience shows that this is a complex exercise that must be carefully managed and planned in the interests of the children concerned. The hon. Member for Angus will agree that detailed plans are required, and we intend to make regulations requiring the commission to publish such plans, using powers set out in schedule 5. Such plans will need to be approved by the Secretary of State before publication.
As set out in the White Paper, the transfer of existing cases will begin in 2010 and take around three years, which is a realistic timetable. Previous attempts to modernise have shown that sufficient time needs to be built into the process in order to manage the transfer. An earlier start would not give the commission sufficient flexibility or time to develop its services to the stage where it can handle the assessment and management of around 1 million cases. A staged approach over a three-year period will also spread demand for the information and support service.
In drawing up the plans, we made a commitment to consult throughout the entire process with all stakeholders. That will be supported by a communications strategy to ensure that parents understand the changes that are being introduced. The commission will develop detailed proposals for the Column Number 314 staged approach to transfer existing cases to the new arrangements, and the regulations will set the framework for that process. Once the commission is in a position to publish its plans for delivery, we will be ready to implement the new system.
To seek to deliver this scale of change to so many people over a 12-month period as the hon. Gentleman has suggested would risk further failure. However, I assure him that we want to move everyone to the new arrangements as soon as practically possible, and we will support the commission in making that happen. I understand why he has tabled the amendment, but having given him the perspective in relation to the commission, I hope that he will agree to withdraw it.

Michael Weir: Having listened to what the Minister has said, it appears that the hon. Member for Daventry was right, and the biological solution may well be what happens in this case. I fully understand the practical difficulties involved, and I will not push the amendment to a vote. However, I urge the Minister to move the process on as quickly as possible, because it is fundamental to give CMEC a real chance to be different from the CSA. I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.

Andrew Selous: I beg to move amendment No. 119, in clause 18, page 8, line 2, leave out lines 2 to 5 and insert—
‘(1) Schedule 5 (which makes provision for, and in connection with, enabling the Commission to require existing cases to transfer to the new maintenance calculation rules or leave the statutory scheme, so far as future accrual of liability is concerned) shall have effect subject to subsections (2) and (3) below.
(2) Before Schedule 5 shall come into effect, the Secretary of State must publish a report to the House giving a detailed report on how the Commission intends to arrange the transfer of cases to the new rules; the consequences for parents and children where there is an existing child support application or assessment/calculation; and the staffing and IT resources which will be made available to support the process.
(3) A Minister of the Crown must make a motion to each House of Parliament in relation to the report mentioned in subsection (2) before the coming into effect of Schedule 5.’.
The amendment seeks to cover similar territory to the previous one, and it is a probing amendment to obtain information from the Minister. I do not expect him to have the details at his fingertips, and I wonder whether he will agree to write to me and the Committee to tell us the Government’s current estimates of the number of old and new cases that are expected to opt for voluntary agreements, the simple cash transfer payment method and transferral to the new statutory scheme. It would be useful to have an idea of the split that the Government foresee, because that will have a direct bearing on CMEC and on its staffing and IT.
I want to ask the Minister about the process by which information and advice will be given to parents in existing cases in the old and new schemes to help them to decide their child maintenance arrangements. Obviously, there will be some cases where child maintenance increases and others where there is likely to be a decrease, depending on the decisions that are taken. I would like to see more information on how that is going to work in practical terms. I anticipate a Column Number 315 large number of parents being confused by the various options, and inertia might set in because the system is so complicated that people decide to stay put, which may not be the right thing to do or be in their best interests.
On the IT side of life, I would like to press the Minister on how confident we can be that the CS2 computer system is up to the task of recalculating around 1.4 million cases and transferring around 500,000 old scheme cases from the CS computer system to CS2. He will know as well as anyone in Committee that IT difficulties have been at the heart of many of the CSA’s problems in previous years. It is important that the Committee, and indeed the House, is as fully informed as possible about the IT issues.

Danny Alexander: May I echo the welcomes that have been given to you, Mr. Taylor? I am delighted that you will be with us for the remaining sittings, albeit I am tinged with sadness that we will not be seeing Mr. Chope again until we are perhaps all involved in another Bill.
I did not discuss the previous amendment, although I had a great deal of sympathy with the points made by the hon. Member for Angus. As the Select Committee pointed out—I think that the Minister has acknowledged this—the CSA has an unfavourable history regarding transition between systems. A number of concerns arise in that context. I hope that the amendment will give the Minister an opportunity either to answer those concerns now or to write to the Committee. Such an answer would be useful, given the public concern about the transitional issues.
The amendment has value, because it would require the commission to work out a lot of the detail before the transitional scheme is implemented. I am sure that the commission will bear in mind the Committee’s remarks—not least those made in the earlier debate—about the need to get that process going as quickly as is practical. That would be a useful discipline, in addition to any answers that the Minister can give the Committee now. It would mean that there would be a final check to ensure that there is satisfaction with the mechanisms to deal with one of the issues of greatest concern to clients, customers and children, in addition to Members of the House who deal with a range of extremely confusing cases where two systems are currently involved—in future, three systems may be involved. That might address some of the questions that the hon. Member for Angus asked in the previous debate. I do not know whether the hon. Gentleman intends to press the amendment to a Division, but he would certainly have my support if he were to choose to do so.
I have echoed the questions that the hon. Member for South-West Bedfordshire has asked, but I want to add one or two more. Again, the Minister may not be able to answer them now and may wish to write to the Committee—I would be perfectly happy with that, because I am simply keen to get the information. The Government estimates of the number of old and new cases relate both to old and old, old cases, as well as to new cases under the third of the three systems. Such Column Number 316 cases are likely to opt for voluntary arrangements, cash transfer or simply transfer to scheme three. The White Paper suggested that old scheme cases with a nil assessment will be given priority in terms of transfer. It also suggested that child poverty will be a focus, which is absolutely right. None the less, what estimates has the Minister made of the number of cases in those various categories? Also, what guidance, if any, does he intend to give CMEC about how to treat cases where there are child-maintenance arrears to be collected across different schemes? Potentially, that will mean collecting the arrears across three schemes. That is an important question given the debate and the concern about arrears.
As the hon. Member for Angus has pointed out, in many cases child support assessments and calculations have not been updated for several years, and a number of non-resident parents may face a significant increase in their child-support liabilities when they are transferred to the new scheme. It is sometimes hard to see in advance from the point of view of either the NRP or the PWC what the outcome is likely to be, but that does seem to be a possible outcome. I wonder what research the Department has carried out to identify the scale of the increases that non-resident parents will face at the point of transition and to calculate how many and what proportion of them will be affected by such changes.
I share the concerns expressed by the hon. Member for South-West Bedfordshire about the computer system. I wonder whether the Minister is satisfied that the CS2 system is up to the task of recalculating child maintenance in up to 1.4 million cases and transferring around 500,000 old-scheme cases from the old computer system to the new one. In a sitting before the summer recess, the Minister told us that he had identified 509 problems with the computer system and had corrected 219 of them. In that context, at this stage at least, can he be satisfied that the answer to that question is in the affirmative? I hope that this debate will give the Minister a chance to reassure us on some of those points or, if not, to write to us.

James Plaskitt: I thank the hon. Members for South-West Bedfordshire, for Inverness, Nairn, Badenoch and Strathspey and for Angus for their contributions. I have been asked a series of questions, and I think they were common to all who spoke.
It has been suggested that we should publish fairly detailed estimates of the choices that customers within Column Number 317 the CSA are going to make when they are presented with the three options. We have been carrying out research, which is not yet complete, on that point. It would not serve any purpose to put out numbers now, because we must consider more than 1 million individual choices. We cannot possibly anticipate what people will choose, and they will not be in a position to indicate their likely decision until they understand more about the choices facing them. We are not at that stage in the process yet.
We have said on several occasions already that across the piece we anticipate a reduced work load for the commission as a result of choices that parents will make, and we have suggested that the overall case load might drop from around the 1.4 million at the moment to about 1 million. That gives some indication of the scale at which we think people will move out into voluntary arrangements. As I have said, however, we are researching that point. I am sure there will come a point when we can present our findings, but I do not want to commit to doing that at this stage, because I do not think that the figures would be terribly helpful or complete. However, the research is in hand.

Danny Alexander: Will the Minister give the Committee an indication of the timescale for that research? If it is not going to be available for our deliberations in this House, will it be available for the deliberations that will take place in another place, so that at least it will be available before Parliament has finished its scrutiny of this important Bill?

James Plaskitt: I undertake to do my best to get something out before the deliberations are complete, but I will not force an acceleration of the research in order to meet a deadline. I would rather the research were complete, thorough and conducted systematically, but I will come back to the hon. Gentleman and see what we can do.
I have been asked about getting out information to parents as they begin to face that choice. Obviously, it is a big job for the commission to ensure that that is done appropriately, and it is clear that that must be the case. We want parents to be given clear indications of the choices before them and information about how they can make their choice and the implications of that choice.
I have been asked about IT. We have identified the scale of the faults within the system. As the hon. Member for Inverness, Nairn, Badenoch and Strathspey has rightly pointed out, although one can consider the number of fixes as a proportion and see that the process is not complete, the fixes to which we have given priority relate to the major defects in the system. We are satisfied that most of the major deficiencies have been corrected, and most of the fixes that still need to be applied to CS2 are relatively minor.
The hon. Member for Inverness, Nairn, Badenoch and Strathspey has pointed out that it is important that we are confident that the IT is up to the job. Deficiencies in IT have bedevilled the system for a long time, and it is crucial that we establish that, as far as we can be certain, the IT is up to the job. It is also a task Column Number 318 for the commission to assess its IT and to look again at the contracts for taking the system forward as it assumes responsibility. It, too, will want to be sure that the IT is entirely adequate for the job.
In schedule 5, we have made provision for the commission to develop a scheme for the movement of existing customers to new statutory maintenance arrangements. The scheme would have to be approved by the Secretary of State, and it is expected to begin in 2010 and to take three years. We intend to be completely transparent about how the transfer process will work. We will make the information available to hon. Members, so that they can raise any concerns at the time and before the transfer to the new arrangements begins. There is nothing to prevent hon. Members from securing a debate through the usual channels. It is essential not only that Parliament can scrutinise the plan, but that parents understand the choices that will be available to them during the transfer period. We are committed to minimising the disruption to parents during that period by providing a seamless service for the move to the new arrangements.
I am concerned that the amendment could build delays into beginning the process of moving cases to the new arrangements. That would prevent children from benefiting from the movement to new maintenance arrangements at the earliest possible opportunity. I therefore hope that hon. Members will feel that committing to providing in advance the details of the transfer process, with the openness and transparency that I have outlined, will enable the process to be fully scrutinised by Parliament and parents. For those reasons, I hope that the hon. Gentleman will ask leave to withdraw the amendment.

Andrew Selous: I started by saying that this was a probing amendment, but I have been somewhat emboldened during the course of the debate and now seek to press it to a vote. I am purely seeking information. I do not accept, as the Minister has said, that the amendment would cause delay. If such actions are to be taken, they will be taken on the basis of available information, and all the amendment does is ask for that information be shared with Parliament.
I do not know whether Committee members are familiar with the Clinger-Cohen arrangements in the United States Congress, where elected representatives regularly scrutinise the details of major public sector IT projects. I have long thought that that would be a useful measure for this Parliament to adopt, not least because of some of the difficulties that we have had. Given that the amendment is purely about seeking information, I do not accept that it would introduce delay, because the Minister and his officials would be acting on information. I am only asking him to share that information and to make it subject to scrutiny. I therefore want to press amendment No. 119 to a vote.

Question put, That the amendment be made:—
Clause 18 ordered to stand part of the Bill.
Schedule 5 agreed to.

Clause 19

Mark Harper: I beg to move amendment No. 100, in clause 19, page 8, line 15, after ‘it’, insert—
‘(aa) for that method of payment not to be used in any case where that person has not failed to make a payment of child maintenance;’.
Thank you, Mr. Taylor. I think that all the welcomes have been done, so I will skip over that, if you will forgive me, but I am delighted to see you in the Chair, anyway.
I will try to be brief, as we have some ground to make up. The amendment is straightforward. In our deliberations before the summer recess, we discussed whether deduction from earnings should be the default method of payment, or whether people should be given the opportunity to avoid such deductions by continuing to make payments, therefore keeping their arrangements from their employer, which would be an incentive for compliance.
The amendment would ensure that as long as someone continues to make their payments regularly and does not avoid them, the deduction from earnings order would not be the basic method—it would be triggered only if someone failed to make a payment. It is worth exploring the Minister’s views on whether it would be sensible to encourage that proposal, or whether earnings deduction should be the basic method, as there are pros and cons on both sides. I tabled the amendment in order to take the measure of the Committee’s view and to see whether the Minister has anything to add to our earlier discussion.

Anne McGuire: I am delighted to be here under your chairmanship, Mr. Taylor. My week started with your asking me a question on the Floor of the House, to which I gave a very good answer, and I am pleased that you will now keep me under control in this Committee.
As a matter of courtesy I welcome the hon. Member for Forest of Dean to his new position on the Opposition Front Bench—long may he stay on the Opposition Front Bench! I know from other debates that he takes a keen interest in issues relating to disability.
I say, very gently, to the hon. Gentleman that this probing amendment would make it difficult for us to Column Number 320 use deduction from earnings orders as an early way of encouraging maintenance payments to be made, although that may not be his intention. As the Committee is aware, the agency normally uses deduction from earnings orders to collect child maintenance in circumstances in which the non-resident parent has already started to build up arrears. As many hon. Members recognise, the building-up of arrears is sometimes the start of major difficulties.
As the hon. Gentleman has said clearly and frankly, the amendment will limit the use of deduction from earnings orders to cases where the non-resident parent has already started to build up arrears and has fallen behind with maintenance payments. That would prevent deduction from earnings orders being used as a primary method of collection and further restrict the use of those orders by preventing them from being used, when there is a strong indication that the non-resident parent will not comply.
We all recognise that there are non-resident parents who will use everything in the book to avoid payment. Moving to the new system—waiting for arrears to build up before taking action—is not a sensible approach, and there is a case for using a deduction from earnings order from the outset.
There is evidence from the United States that there may be merit in using a deduction from earnings order as the primary method of collecting maintenance from non-resident parents, and we want to test whether that approach would be effective in this country. We shall try to find out if it leads to more money being collected for the children whom the whole Bill is intended to support, without creating—dare I say it?—excessive burdens on business.
Our intention is for the commission to operate a pilot to test whether setting deduction from earnings orders as a default method of collection will increase compliance. I assure the Committee that we intend to put safeguards in place. Regulations will provide for deduction from earnings orders not to be used when non-resident parents can demonstrate a good reason, with a right of appeal if the commission decides that good reason has not been shown.
Our clear primary aim is to get money to children who need support as quickly as possible. However, I also want to be clear that we will share the lessons learned from the pilot and take account of the impact on business. We have already had some preliminary discussions, in particular with the small business community. With the greatest respect to the hon. Gentleman, his amendment would further reduce, rather than increase, the scope for utilising what we believe will be an effective method for collecting child maintenance. It will have all the safeguards that I have described, and there will be piloting and sharing of the pilot results. Given the hon. Gentleman’s opening indication that the amendment is a probing one, I ask him to withdraw it.

Mark Harper: I thank the Minister for her generous welcome. The fact is, of course, that I shall be staying on the Opposition Front Bench, given the Prime Minister’s decision not to have an election.
As I think that I said earlier, I drafted the amendment specifically in relation to the missing of just one payment. We did not intend to allow arrears to build up, and I therefore welcome the Minister’s comments. I welcome, too, the Minister’s commitment to a pilot and to wide sharing of its results to see whether the use of the deduction from earnings order as the primary method, right from the beginning, is successful. Clearly, if the evidence shows that that method works smoothly and that it reduces the level of arrears and increases compliance, it will be a good thing.
Given the concerns that the Minister has expressed and the fact that the amendment is a probing one, I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.

Anne McGuire: I beg to move amendment No. 126, in clause 19, page 8, line 19, at end insert—
‘(4A) On an appeal under regulations made under subsection (4)(b) the court or (as the case may be) the sheriff shall not question the maintenance calculation by reference to which the order under section 31 would be made.
(4B) Regulations under subsection (4)(b) may include—
(a) provision with respect to the period within which a right of appeal under the regulations may be exercised;
(b) provision with respect to the powers of a magistrates’ court (or, in Scotland, of the sheriff) in relation to an appeal under the regulations.’.

Anne McGuire: The Government want to ensure that the regulation-making powers in respect of appeals to magistrates courts and to the sheriff courts in Scotland are consistent throughout the Bill for our administrative collection and enforcement proposals. We have therefore been re-examining the regulation-making powers in relation to appeal rights that apply when a deduction from earnings order is used as a basic method of payment, as provided for in the clause. In doing so, we have compared them with corresponding regulation-making powers that already exist in relation to deduction from earnings orders and new provisions regarding deduction orders. Those are all situations in which an administrative decision made by the commission may be appealed to the magistrates court or, in Scotland, to the sheriff court.

Tim Boswell: Will the Minister clarify whether she means consistency only of implementation in the Bill, or consistency also with regard to practice on other deduction of earnings orders made as a result of Government decisions, maybe in another Department? Clearly, the more consistent and coherent things are, the better.

Anne McGuire: We should restrain ourselves from moving outside the Bill’s scope. I am referring to consistency within the parameters of the issue under discussion. I suspect that the hon. Gentleman’s question was either a teasing question or a fishing expedition, but I thank him for the generous way in which he put the question and for indicating his acceptance of my response.
On reflection, we have recognised inconsistencies. For example, our regulation-making powers in clauses 21 and 22 clearly allow us to set time limits for appeals. Equivalent provision is not made in clause 19, although our intention was always to specify a time limit in regulations. The amendment would insert provisions in clause 19 and schedule 7 clarifying that the regulations may specify a time limit. We should take this opportunity to ensure consistency and clarity for appeal provisions in respect of our administrative collection and enforcement powers. I ask the Committee to support and approve these technical amendments to address the differences.
Amendment agreed to.
Clause 19, as amended, ordered to stand part of the Bill.
Clause 20 ordered to stand part of the Bill.

Clause 21

Mark Harper: I beg to move amendment No. 101, in clause 21, page 9, line 15, after ‘current’, insert ‘or deposit’.

David Taylor: With this it will be convenient to take amendment No. 102, in clause 21, page 9, line 38, after ‘current’, insert ‘or deposit’.

Mark Harper: These amendments were tabled to test the breadth of the powers that the Government wish to give the commission to go after a range of accounts that people may have. I suspect that “current account” was mentioned to ensure that the Bill refers to the type of account that it is possible to set up regular payments against and make deductions from. However, in the banking world the distinction between a current account and a deposit account is much less severe than it used to be, in the sense that people can get hold of electronic payments. I am testing whether the current wording leaves an opportunity for somebody effectively to transfer all their money into a deposit account to keep it away from CMEC’s ability to go after it with deductions and regular payments. With the onset of electronic banking, an individual will not suffer any penalty from only operating a deposit account, because with electronic banking they can move their money around flexibly.
Although the amendment may not be the right way to proceed, I want to explore the extent to which the Government have considered whether there needs to be any extra flexibility in the powers available to CMEC to ensure that people cannot, by using crafty financial management, avoid its getting its hands on their money.

Tim Boswell: Given that we are discussing financial guarantees, does nearly the same consideration apply where people have multiple current accounts or different types of account? CMEC may not be able to capture such accounts within the deduction from earnings order if it cannot grasp the whole of somebody’s income or resources?

Mark Harper: I thank my hon. Friend for that point, which backs up the case that I am making. I will be interested to hear the Minister’s comments, just to ensure that, as my hon. Friend said in previous debates, we prevent opportunities arising for people who are trying to avoid meeting their responsibilities for their children to use crafty financial management, thereby putting them outside the grasp of the commission.
I am not confident that the clause gives the commission sufficient powers. The drafting may need to be a little wider to give the commission powers to prevent people from escaping. I would be grateful if the Minister were to comment on the extent to which Ministers have thought about that and whether there is any scope for the Bill to be strengthened in that area.

Danny Alexander: I will not detain the Committee for long.
The amendment raises some useful questions. In proposed new section 32A(1), paragraph (b) specifies that
and paragraph (c) states that
There is quite a range of accounts between those two. Although I understand the obvious reasons for excluding trade or business accounts, perhaps the Minister will explain the definition of a current account for these purposes and, if appropriate, seek to widen it or accept the amendment to allow, as the hon. Gentleman has said, a wider range of accounts to be included for those purposes, so that what he called “crafty financial management” cannot be used to shuffle money between accounts to avoid it looking like someone has an account that could be subject to the deduction orders.

Anne McGuire: I will give the hon. Member for Forest of Dean a little, but not a total, taste of victory here, because he has made a valid point, which was confirmed by the hon. Member for Inverness, Nairn, Badenoch and Strathspey. I know that the issue causes similar concerns among my hon. Friends.
The hon. Member for Forest of Dean has identified the fact that there is now an array of accounts available to people. I remember when one was allowed to open only a deposit account in a bank, because there was no such thing as a current account. I have given my age away—you may remember those times, too, Mr. Taylor. We recognise that it may be helpful to revisit the clause and to give further consideration to the amendment. We want the commission to have the power to impose deductions to maximise the amount of maintenance that it can recover. I think that we have all recognised throughout the debates in Committee and in conversations elsewhere that there are some deliberately evasive non-resident parents who will manoeuvre things to avoid paying what they should be paying. However, given the seriousness of the power, we want to reconsider it. Given our commitment to revisit the clause, to consult the relevant parties and to come back at a future time, I ask the hon. Member for Forest of Dean to withdraw the amendment.

Mark Harper: Surprised as I am that I have had just a soupçon of victory there, I will try not to get carried away. I am very grateful for the Minister’s comments and her commitment to consult. The amendment was intended to provoke another look at the clause. However, just inserting the word “deposit” does not add the full breadth of what is necessary. Given the Minister’s commitment to consult interested parties and to return at a later stage, perhaps on Report, with a Government amendment, I beg to ask leave to withdraw my amendment.
Amendment, by leave, withdrawn.

Mark Harper: I beg to move amendment No. 103, in clause 21, page 11, line 29, leave out ‘may’ and insert ‘shall’.

David Taylor: With this it will be convenient to discuss the following amendments: No. 122, in clause 21, page 11, leave out line 32 and insert—
‘(a) if he is aggrieved by the making of an order under section 32A or by the terms of such an order’.
No. 104, in clause 22, page 16, line 10, after ‘section’, insert ‘32D or’.
No. 105, in clause 22, page 16, line 14, leave out ‘may’ and insert ‘shall’.

Mark Harper: This is a small change in language but with a very important effect. The Bill states:
I want to strengthen that so that the Secretary of State has to—rather than “may”—make regulations to provide that appeal method. Given that we have made provision for an appeal, it is important that those regulations are made and that we are not left with a situation in which the Secretary of State has not made those regulations and someone is unable to exercise their right to an appeal. That is all I need to say, and I want to hear the Government’s view.

Danny Alexander: I want to discuss amendment No. 122, which makes a slightly different point from the one that the hon. Gentleman has made. This is a probing amendment to try to understand the Government’s thinking around a provision that appeared in section 32(5) of the Child Support Act 1991, which provided that regulations may include a provision that
The Minister can confirm that the Secretary of State has never taken advantage of the full extent of these powers. The current regulations only provide for an appeal against the deductions of earnings order if the terms of the order are defective or the payment in question does not constitute earnings. In addition, there is no right of appeal in respect of the amount to be deducted each week for historic arrears. There are a number of issues that I hope the Minister will flesh out in this short debate.
The amendment would allow regulations to be incorporated, as envisaged under previous legislation, to allow an expansion of appeal rights for non-resident parents. In essence, the point that has been made to me is that the current regulations make an appeal very hard, and in some cases almost impossible, to carry through.

Tim Boswell: Does the hon. Gentleman agree that a typical case—I have encountered this on a number of occasions—involves somebody who is in the “can’t pay” rather than the “won’t pay” category, and who has fluctuating earnings that are highly dependent on overtime or seasonal earnings, finds that the order does not fit their income stream, even if it were to average out over a year?

Danny Alexander: I agree with that intervention. In my experience, similar circumstances apply when somebody is in and out of work—moving from benefit into work and back again. That often occurs in places where seasonal work proliferates, such as my constituency.
In addition, the Bill includes a move to gross income for the purposes of calculations. Present regulations state that up to 40 per cent. of a person’s net income can be taken, and no percentage figure has been given on the limit on what can be deducted when the move to gross income takes place. Clearly, that may also have an impact on appeals. Quite rightly, the Government are making efforts to recover the majority of the existing arrears, and I applaud those efforts. While that is the correct approach, there is a need for safeguards for the non-resident parent in terms of appeal, because little detail is known about the percentage of a person’s income that may be deducted in payments to meet arrears.
As it would carry forward suggested powers made under previous legislation, the amendment might allow a broader range of circumstances, such as those outlined by the hon. Member for Daventry, to be taken into account in making an appeal. It would ensure that while the system continues, as the Minister has rightly stressed, to get the money to children as quickly as possible, there is fairness in the system, which has been stressed throughout our deliberations. The system must be seen to be fair to those non-resident parents who are seeking to make payments.

Anne McGuire: I thank the hon. Gentlemen for tabling this group of amendments. First, I would like to address amendments Nos. 103 and 105, which would change the nature of the regulation-making powers from permissive to mandatory. Both amendments would force the Secretary of State to make regulations providing for appeals.
I hope that the Committee will accept that there is no question that we would not provide for a right of appeal, but I appreciate the point made by the hon. Member for Forest of Dean that as the clause says “may” instead of “shall”, the intention could be open to question. I will give the hon. Gentleman a second little taste of victory today—the issue has also been raised by Government Back Benchers. We certainly intend that the regulations will provide a right of appeal, and we Column Number 326 want to consider the two amendments further in the light of what may or shall be a misinterpretation, which could undermine our intention for the Bill. I hope that the hon. Gentleman will withdraw his amendment, given our commitment to consider whether there is sufficient clarity in the Bill.
Amendment No. 104 would give any person affected by the interim order stage of a lump sum deduction a right to appeal against the making of that interim order, which is a point raised by the hon. Member for Inverness, Nairn, Badenoch and Strathspey. He is right to highlight that in our eagerness over the policy intention of getting money quickly to the parent with care and the child, we must be clear that there is fairness in the system and that the system is robust. I hope that I can allay his fears and those of other hon. Members by explaining that safeguards are already in place on that provision.
An interim order acts to freeze an amount of funds before the application of the final order. That period of freezing allows the non-resident parent to make representations to the commission regarding whether all or part of the funds should be deducted under a final order. If a final order is made without considering those representations, the non-resident parent has the right to appeal to a magistrates court or, in Scotland, to the sheriff. In addition, during the freezing period the non-resident parent will have the ability to apply to the commission for funds to be released in certain circumstances. That will be provided for in regulations, and should the commission withhold consent for the release, the non-resident parent may again appeal.
Finally, amendment No. 122 raises an interesting point for discussion, but I respectfully suggest that it does not change the intent of the clause. The clause allows for regulations, which in turn will allow any party affected to appeal against the making of a current account deduction order. That includes the right to appeal against the terms of the order. Therefore, I hope that I can assure hon. Members that there are sufficient appeal rights in relation to current account deduction orders. As in earlier discussions, “current account” is the generic term that I will use. We feel that those appeal rights are fully provided for in the clause. I further reassure the hon. Member for Inverness, Nairn, Badenoch and Strathspey that there is a maximum amount that may be deducted by deduction orders, and the situation would be the same with a maximum deduction amount based on an assessed order, where arrears and a lump sum are to be taken into account.
In closing, it is also worth noting that there are separate appeal rights in respect of the maintenance calculation and that deduction orders will be used only when a non-resident parent has failed to pay. Furthermore, given that the commission cannot impose the final order stage of a lump sum deduction without first considering the representations that have been made, the safety nets to ensure that there is fairness in the system are there at all points of the process. Therefore, I ask the hon. Member for Forest of Dean to withdraw the amendment with the reassurance that we will consider the points that he has made.
Amendment, by leave, withdrawn.
Clause 21 ordered to stand part of the Bill.
It being twenty-five minutes past Ten o’clock, The Chairman adjourned the Committee without Question put, pursuant to the Standing Order.
Adjourned till this day at half-past One o’clock.